The European Commission has opened an in-depth investigation to assess whether the proposed acquisition of Dutch cable operator Ziggo by the telecommunications group Liberty Global, headquartered in London, is in line with the EU Merger Regulation. Liberty Global – through its subsidiary UPC – and Ziggo both own a cable network in the Netherlands through which they provide various retail pay TV and telecommunications services. Both companies also operate a premium pay TV film channel in the Netherlands. The Commission has concerns that the transaction may reduce competition in a number of pay TV and telecommunications markets in the Netherlands. The opening of an in-depth inquiry does not prejudge the outcome of the investigation. The Commission now has 90 working days, until 19 September 2014, to take a decision.

The Commission's initial market investigation indicated that the proposed acquisition would raise competition concerns in the Dutch markets for (i) the acquisition of individual Dutch language audio visual content, (ii) the acquisition of TV channels, (iii) the wholesale supply of premium pay TV film channels, and (iv) the retail provision of fixed internet access, TV and fixed telephony services. The merger is bringing together two of the main players in these markets in the Netherlands (and the only two suppliers as regards premium pay TV film channels).

At the wholesale level, the Commission found that the proposed acquisition could significantly increase the merged entity's negotiation power towards content owners and TV channels suppliers. This could, in turn, negatively affect its competitors in retail pay TV and Dutch end consumers. Moreover, the proposed transaction could reduce the existing competition for the wholesale supply of premium pay TV film channels, by combining the only two linear film channels in the Netherlands, Film1 and HBO.

At the retail level, the Commission's market investigation showed indications that Liberty Global and Ziggo exert some indirect competitive pressure on each other, despite the fact that their cable networks do not overlap geographically. The transaction could therefore reduce existing competition in the Dutch retail pay TV and telecommunications markets where the parties hold significant market shares. In addition, in light of the high level of concentration, existing market transparency and high barriers to entry, the removal of Ziggo as an autonomous player could increase the likelihood that the remaining competitors, in particular the merged entity and KPN, would coordinate their competitive behaviour and increase prices or delay investments.

Finally, the Commission's investigation provided indications that the merged entity might have the ability and incentive to shut out or otherwise hinder so-called 'over-the-top' TV service providers – i.e. TV services provided 'streaming' via the Internet – from effective access to its internet network, in order to strengthen its own competitive position in various TV-related markets. The merged entity could also have the ability and incentive to shut out its competitors in the Dutch retail TV market from access to its premium film channels.

The Commission will now investigate the proposed transaction in-depth in order to determine whether or not these initial concerns are confirmed.

The transaction was notified to the Commission on 14 March 2014.

Companies and products

Liberty Global is active in the European Economic Area (EEA) in the telecommunications sector, operating cable networks in 12 countries. Ziggo is active in the telecommunications sector in the Netherlands and especially in the markets for the retail provision of TV, fixed internet access and fixed telephony services. The only other major provider of these retail services in the Netherlands, that also controls its own network infrastructure, is KPN.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involvingcompanies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). However, as part of the current matter the Phase I deadline was extended by 10 working days following a request for a full referral of the matter to the Dutch competition authority, made by the latter under Article 9 of the Merger Regulation.

In addition to the current transaction, there are five other on-going phase II merger investigations The first on-going investigation, the planned acquisition of Telefónica Ireland by Hutchison 3G UK (H3G), relates to the markets for retail mobile telephony and for wholesale access and call origination in Ireland (see IP/13/1048). The deadline for the final decision is 20 June 2014. The second on-going investigation concerns the proposed acquisition of E-Plus by Telefónica Deutschland (see IP/13/1304 and IP/14/95) with a deadline suspended from 5 May 2014. The third one concerns the proposed acquisition of titanium dioxide assets of Rockwood by Huntsman (see IP/14/220). The deadline for a decision in this case is 18 September 2014. The last two matters concern an asset swap in the cement sector, by which Cemex intends to acquire the Spanish operations of Swiss building materials group Holcim (see IP/14/472) and by which Holcim, in turn, intends to acquire certain of Cemex' German assets (IP/13/986). The deadlines of these two investigations are respectively 5 September and 8 July 2014.